3 Points a NYC Marshal Can Do to Your Business Bank Account (and 3 They Cannot)

The balance in the account answers to the judgment before it answers to the business. An owner who discovers a restraint by finding frozen funds has met the enforcement stage of an older debt, and the surprise reflects timing rather than error. The procedure behind the freeze is old, codified in Article 52 of the CPLR, and it moves through officers of the court rather than through employees of the funder.

The caption on the execution names the officer entitled to act. Counsel should read that caption before concluding which office may enforce the judgment, since the statute directs executions to the sheriff of the county while enforcement within the five boroughs may involve a city marshal, a division of labor the papers themselves will confirm or deny.

Service of the Restraining Notice

CPLR 5222 allows a restraining notice to issue from the clerk or from the creditor attorney acting as an officer of the court, and service may be made in the manner of a summons or by registered or certified mail. The notice forbids the bank to transfer property in which the debtor holds an interest, and disobedience exposes the recipient to contempt. The restraint operates on the bank rather than on the owner: the account stays titled in the business name while every outward movement stops.

The restraint is powerful. It is also fragile, and the fragility comes from procedure rather than mercy.

Often the first notice an owner receives is the frozen balance itself. And the options narrow with each payroll the frozen account misses. Most owners telephone counsel only after the freeze lands, a delay that needs no apology.

Levy on the Account as a Debt of the Bank

The levy framework of CPLR 5232 treats the deposit balance as a debt the bank owes to the business, and the officer levies by serving the execution on the bank in the manner of a summons (which, it should be noted, places the legal duty on the institution that holds the funds rather than on the owner who deposited them, so telephone protests to the branch change nothing about the obligation). Service reaches property then held and debts that come into the bank hands until transfer, payment, the ninetieth day, or court order, and the bank must then pay over to the officer.

Counsel will ask for the execution papers before discussing settlement figures, since no negotiation proceeds sensibly without them.

A peculiar quiet settles over an office where the operating account has frozen. The effect on payroll week is extremely immediate, and fees gather on the idle balance while the owner seeks advice.

Compelled Answers About the Accounts

The information subpoena arrives as written questions with a copy of the papers and a prepaid return envelope, served by registered or certified mail. Answers go back under oath, each question answered in full, with the original questions returned within seven days after receipt. A subpoena aimed at a third party must carry a signed certification of reasonable belief, and one without it is null and void.

The questions arrive by mail and the oath makes them serious.

Funds the Restraint Must Leave Alone

A bank restraint in New York must be accompanied by an exemption notice and two claim forms served on the account holder, and where those papers are missing the restraint fails at its foundation, since the statute treats the omission as fatal rather than technical, so the first question counsel asks concerns not the balance but whether the envelope contained the forms the law demands.

Whether courts in every county apply the voidness rule with equal strictness is a question worth carrying into the conference room. The published rulings available on this narrow point form a thin record, though the direction of the statute is plain.

Beyond procedure, amount matters. New York law holds a floor beneath restraint keyed to two hundred forty times the minimum wage, and funds traceable to protected sources such as retirement plan benefits carry shields of their own under federal law. Exemptions protect and preserve only what the owner claims, and the distinction between exempt and reachable funds is extremely fact bound.

This is the part owners miss. Exempt does not mean invisible. Simply complete the claim forms and return them as the notice directs, because the shield stays theoretical until the owner invokes it.

Collection Before Judgment

No restraint issues before judgment. The funder holds contract rights until a court supplies enforcement power, and the account stays under the control of the business in the interim.

A filed UCC statement does not change this order. The filing perfects a claimed lien in described collateral and its proceeds. It proves neither the amount of the debt nor a right to seize operating funds.

A security interest in collateral allows possession after default where the recovery proceeds without breach of the peace. Operating cash outside described collateral waits for the judgment process described above.

Threats Beyond the Papers

No paper in the civil file authorizes an arrest. Funders wield restraining notices, executions, levies, liens, and lawsuits, and none of those instruments places a person in custody. Threats of arrest over civil business debt mark the caller, and the 2022 federal enforcement action against MCA providers charged deceptive seizures of exactly this character. Owners should preserve every communication and let counsel measure the conduct against the record rather than memory, as federal collection guidance contemplates.

Delancey Street offers a free confidential initial review for owners facing restraint or levy pressure, and a business can ask whether its accounts and agreements qualify for settlement assistance. The company acts as a settlement company and coordinates legal defense work with independent counsel, since it is not a law firm. The objective is to ensure the response addresses the correct judgment and the funds the law actually exposes, and to ensure no payment issues before exemptions are claimed. Counsel should review and analyze the execution, the notices, and the claim forms before any money moves, even briefly, toward the creditor.

Paper turns into power at the enforcement stage, and the limit on that power is procedure followed to the letter. Steps taken, or not taken, in the first days after service shape the case against the business. Resist the urge to negotiate with the collector before counsel has read the execution.